Section 194 (i) of the Income Tax Act refers to the Tax Deducted at Source (TDS) on rent. The Section 194 (i) is particularly for individuals earning income from rent. Since rent received on property is subjected to TDS, it is an additional income earned by the person by subletting their property.
What is Section 194 (i) of the Income Tax Act?
The Finance Act, 1994 introduced the section 194I regarding the deduction of tax while paying rent. The section 194I states that any person, whether an individual or HUF who receives income on rent is liable for TDS when the income credited is more than ₹2,40,000 in the financial year. The TDS threshold for deduction of tax on rent is ₹2,40,000 for the FY 2022-23, while the threshold limit until FY 2018-19 was ₹1,80,000.
Meaning of Rent in terms of Section 194 (i)
Rent refers to any payment received under any sub-lease/lease/tenancy/agreement for the arrangement for the use any-
- Industrial Plant or Manufacturing Facility Plant
- Equipment such as tools, computer systems, other infrastructure required for running a business
Tax Deduction at Source (TDS) Rates of Section 194I
Tax or TDS is applicable when the payee transfers/credits the rent amount ‘income by way of rent’ to the landlord’s account. The TDS will be deducted at the time of crediting/paying the rent through cheque/draft/cash, etc.
The below given table is the rates of tax deduction under section 194I-
|Nature of Property/Asset||Rate of TDS on Rent|
|Rent paid for plant, machinery, or equipment||2%|
|Rent paid for land or building||10%|
|Rent paid by an individual/HUF whose turnover does not exceed the limits specified in 194-I||5% (provided the rent paid exceeds Rs. 50,000 per month) u/s 194IB|
|Rent paid for furniture or fittings||10%|
TDS on Rent Returns Filing Due Date
The table-mentioned below are the dates for filing the return for TDS on rent-
|Period||Due Date to deposit TDS on Rent|
|April to June||30th July|
|July to September||31stOctober|
|October to December||31st January|
|January to March||30th May|
Exceptions for TDS on Rent Deduction under section 194I of the Income Tax Act
Under Section 194I, TDS is not deducted under following situations-
- No TDS will be deducted if the rent amount whether due or paid, is up to ₹2.4 lakhs
- If the tenant is individual or HUF whose turnover is not more than ₹1 crore in case of business and ₹50 lakh is case of profession during the financial year
- If the payee is government, statutory or local authority
Section 194I of the Income Tax Act- FAQs
TDS on Rent rules as per section 194 (i).
All the individuals or Hindu Undivided Family (HUF) except those citizens who are subject to tax audit under clause A and B of Section 44AB.
Any amount of income received from rent including residential property, shop, building or a factory plant comes under taxation process.